The IEA said less oil has been stock-piled than originally thought (Source: Getty)

Jessica Morris

The International Energy Agency has joined the rising crescendo of voices which have said oil markets are moving towards balance.

"At halfway in 2016, the oil market looks to be balancing," according to the IEA's widely watched monthly oil report released today. But this wasn't enough to lift investors' confidence, with oil prices staying below $50 per barrel.

But a small surplus will re-emerge early next year as global oil stocks build slightly in the first half of 2017 before falling slightly more in the second half of 2017.

It comes after yesterday's forecast from Opec showed that the global oil market would be more balanced in the second half of 2016.

The Paris-based IEA said oversupply in the first half of this year is likely to be 800,000 barrels of oil per day, rather than the 1.5m initially estimated.

"Between January and today two main factors have transformed the outlook: first, oil demand growth has been significantly stronger than we expected," it said.

The second factor "has been unexpected supply cuts. Canada's wildfires at their peak removed up to 1.5m barrels per day of production capacity; in Nigeria, militant action has forced production down to thirty-year lows and Libya remains a long way from significantly increasing its production."

This could be exaggerated further if the shut-in list is "augmented by Venezuela where the deteriorating situation could affect the operations of the oil industry."

Oil recently rallied to a 2016 high above $51 per barrel, due to supply outages in Nigeria and Canada as well as declining US oil production, helping May mark the third consecutive month of price gains.